Energy Costs Risk Europe’s Competitiveness, Johansson Says

By Stefan Nicola -
Mar 18, 2013

Energy costs are probably the
biggest challenge facing European policy makers as they attempt
to make the region more competitive, said Leif Johansson, the
chairman of Ericsson AB who heads a Europe-wide industrial body.

European Union member states need to coordinate and
integrate their energy policies to prevent costs from rising as
they fall in competing regions such as the U.S., Johansson said
in a phone interview before talks in Berlin today with German
Chancellor Angela Merkel and French President Francois Hollande.

“We are beginning to see a very wide gap coming up with
the U.S. for energy-intense industries,” said Johansson, who
heads a group of about 50 chief executive officers and chairmen
from Vodafone Group Plc (VOD) to Siemens AG. “Energy perhaps is the
common denominator where all European countries need to think
how we can make that a more efficient and better market.”

Johansson is advising the French and German leaders plus
European Commission President Jose Manuel Barroso as they bid to
shift the EU’s focus from crisis fighting to tackling longer-
term challenges such as record youth employment in Spain and
Greece. Merkel and Hollande have said they will present a joint
“competitiveness pact” to put to fellow leaders at an EU
summit in June.

“We have done a lot to ensure the stability of the euro
zone, you might even say most of what is needed,” Hollande told
reporters in Berlin. “That was the precondition. Our priority
is to reach the highest level of growth. To achieve this we have
to do whatever is needed to get Europe’s competitiveness as high
as possible.”

Growth, Finances

Merkel, who hosted today’s talks, said the goal is “a
Europe with more growth, a Europe with solid finances” and
jobs, and a competitive Europe, “because we won’t achieve this
any other way.” Energy policy, research and information
technology will feature in this evening’s discussion, she said.

Germany, Europe’s biggest economy, has seen energy costs
rise as the country shuts nuclear reactors and expands more
expensive renewable-energy generators such as wind turbines and
solar panels. Gas prices in Germany are now four times those of
the U.S. because of the latter’s support for shale gas, Ulrich Grillo, president of Germany’s BDI industry association, was
cited as telling the Frankfurter Allgemeine Zeitung on Jan. 28.

Skills Shortage

Europe also needs “flexible and responsible” education
systems to provide companies with people skilled in math and
sciences to help plug a gap of “possibly 500,000 engineers,
math, science and technology” workers by 2025, said Johansson.

He is meeting Merkel and Hollande in his capacity as head
of the European Roundtable of Industrialists, whose corporate
members include Total SA, Nestle SA and Bayerische Motoren Werke
AG and have combined sales of more than 1.3 trillion euros ($1.7
trillion), according to the group’s website.

Political will to find ways to make Europe more competitive
has increased in the past year or two, Johansson said. “It used
to be an economic insight that large corporations, small and
medium-sized corporations, and academia lived in symbiosis with
each other to create strong clusters,” he said. “That has now
spread to become a political insight.”

While short-term crises such as the current one in Cyprus
need to be handled “in the best way,” a coordinated plan to
make Europe more competitive “is the only thing that over time
will create more jobs and restore back growth,” Johansson said.